Corporate Fact Sheet December...
6
Corporate Fact Sheet December 2014 WesternZagros is a publicly-traded, Calgary-based, international oil and gas company focused on exploring, developing and producing crude oil and natural gas in the Kurdistan region of Iraq. As only the fourth international company to enter Kurdistan, WesternZagros was able to hand-pick its exploration block in 2005, recognizing the potential for a huge light oil resource base. The Company holds a 40% working interest in two Production Sharing Contracts (PSCs), both of which are on trend with, and adjacent to, a number of prolific historic oil and gas discoveries. WesternZagros has completed the exploration and appraisal phase on the Kurdamir and Garmian blocks and is commencing the development of its crude oil and gas discoveries. Production of light oil from the Sarqala-1 well on the Company’s Garmian Block is expected to commence in the first quarter of 2015. A recent workover on the Sarqala-1 well increased flow rates and tested up to 11,500 barrels per day of 40 degree API oil.
Transcript of Corporate Fact Sheet December...
1 / Corporate Fact Sheet
Corporate Fact Sheet
December 2014
WesternZagros is a publicly-traded, Calgary-based, international oil and gas company focused on
exploring, developing and producing crude oil and natural gas in the Kurdistan region of Iraq. As only
the fourth international company to enter Kurdistan, WesternZagros was able to hand-pick its
exploration block in 2005, recognizing the potential for a huge light oil resource base. The Company
holds a 40% working interest in two Production Sharing Contracts (PSCs), both of which are on trend
with, and adjacent to, a number of prolific historic oil and gas discoveries.
WesternZagros has completed the exploration and appraisal phase on the Kurdamir and Garmian
blocks and is commencing the development of its crude oil and gas discoveries. Production of light oil
from the Sarqala-1 well on the Company’s Garmian Block is expected to commence in the first quarter
of 2015. A recent workover on the Sarqala-1 well increased flow rates and tested up to 11,500 barrels
per day of 40 degree API oil.
2 / Corporate Fact Sheet
2 / Corporate Fact Sheet
1 - See October 2, 2014 Material Change Report for Garmian Block Gross and Working Interest 2P reserves. 2 – Block Gross Mean Estimates of Kurdamir and Garmian Blocks 3 - Total Gross Capacity of Facilities, subject to KRG approval 4 - Management estimates based on Block Gross unrisked 2C Contingent Resources for Kurdamir and Block Gross 2P Reserves and unrisked P50 Prospective Resources for Garmian
3 / Corporate Fact Sheet
2 / Corporate Fact Sheet
Large, strategically attractive assets
Kurdamir: Block Gross Mean Contingent Resources of 976 MMboe, 58% oil (38° to 40° API), low sulphur, low H2S Resource defined by 3D seismic and 3 wells drilling and tested confirming oil Garmian: Initial Working Interest 2P Reserves of 5 MMbbl, oil (38° to 40° API), low sulphur, no H2S Sarqala-1 well produced, in 2012, 1 million barrels under an extended well test confirming reservoir quality
Significant upside from incremental prospective resources:
Kurdamir: Block Gross Mean Prospective Resources of 1.6 billion BOE for further delineation drilling includes over 1.2 billion BOE
downdip from proven oil in Oligocene. Garmian: Block Gross Mean Prospective Oil Resources of 311 MMbbl identified for further delineation drilling.
Highlights
Successfully completed a rights offering generating gross proceeds of Cdn$200 million. Proceeds will be used to fund development costs on the Kurdamir and Garmian Blocks and for general and administrative purposes.
Successfully completed the workover of the Sarqala-1well on the Garmian Block to increase the flow capacity of the well. The well tested at rates of up to 11,500 bbl/d of 40 degree API oil.
Submitted the Garmian development plan in June 2014 and anticipate approval late 2014. The development plan includes three phases that target oil production of 25,000 to 35,000 bbl/d.
Submitted a Kurdamir development plan for approval; discussions with KRG to redefine the plan are ongoing.
Established Proved plus Probable Reserves for the first time by completing an independent evaluation of the Company’s light oi l discovery on the Garmian Block, This evaluation recognizes an initial 12 million barrels of gross 2P Reserves, representing only a small portion of the potential of the Sarqala Discovery.
Conducted economic valuations of conceptual development for the Kurdamir Block in excess of $1.5 billion. For the Garmian Jeribe/Upper Dhiban, 2P Reserves have a value of $75 million and P50 Prospective Resources have a value of $347 million.
Next Steps:
Operations: The Garmian Block’s Hasira-1 exploration well test results anticipated early 2015. During 2015, subject to KRG approval, the Company plans to drill two horizontal or deviated wells (Sarqala-2 and Sarqala-3) during Phase 2 of the Garmian development plan as well as install centralized storage and loading facilities and begin the front end engineering and design work for an incremental 25,000 to 35,000 bbl/d central processing facility for oil. On the Kurdamir Block, Kurdamir-4, the first horizontal development well, to be spud dependent on KRG approval, anticipating first production end 2015. Production: Subject to KRG approval of the Garmian development plan anticipated by early 2015. Sarqala-1production capability rates up to 10,000 bbl/d. Corporate: The Company is executing on phased development plans for its two significant oil and gas field on the Garmian and Kurdamir Blocks. The overall development philosophy for the PSC lands is based on a phased expansion strategy: maximize production through increasing processing facilities and production capabilities and drilling. Corporate Social Responsibility
WesternZagros aspires to be an industry leader with respect to corporate social responsibility. The six key corporate social responsibility focus areas in the PSC Lands of Kurdistan are local employment, water supply, education, health care, agriculture and recreation. The Company bases its corporate social responsibility initiatives on the UN Global Compact and the ten principles in the areas of human rights, labour, environment and anticorruption.
4 / Corporate Fact Sheet
2 / Corporate Fact Sheet
Table 1: See October 2, 2014 Material Change Report for Working Interest Reserves, Contingent Resources and Prospective Resources and further details in respect of the economic analysis completed, including the initial development phases submitted to the KRG, the full field development scenario and pricing and other assumptions.
Petroleum Contracts
The Kurdamir and Garmian PSCs each govern separate contract areas. WesternZagros holds a 40% working interest in both PSCs. The Kurdamir contract areas operated by Talisman, with a 40% working interest. The Garmian contract area is operated by WesternZagros with a 40% working interest held by Gazprom Neft. The KRG holds the remaining 20% working interest in both PSCs. The schematic illustrates the sharing of production under the Terms of the Company’s PSCs. Under the PSC terms, the contractor’s portion of “Profit Oil” is based on a sliding scale from 35% to 16% depending on the R-Factor. The R-Factor is established by reference to the ratio of cumulative revenues over cumulative costs. When the ratio is below one, the contractor is entitled to 35% of the Profit Oil. The contractor’s percentage is then reduced on a linear sliding scale to a minimum of 16% when the ratio equals two or greater. Reserves, Contingent Resources and Prospective Resources
Reserves(1) Block Gross Working Interest (Gross) (5)
License Reservoir (Classification) (MMbbl) (MMbbl) (MMboe) NPV10
US$ million (7)
Garmian Jeribe/Upper
Dhiban
1P (6) 3 1 1 33
2P(6) 12 5 5 75
3P(6) 23 9 9 216
Contingent Resources (2) Block Gross P50 (Best Estimate)
Working Interest (Gross)
License Reservoir (MMbbl) (MMbbl) (MMboe) NPV10
US$ million (7)
Kurdamir Tertiary Oligocene 366 146 288
1,555 (7)
Tertiary Eocene 138 55 82
Prospective Resources
Block Gross P50 (Best Estimate)
Working Interest (Gross)
License Reservoir (MMbbl) (MMbbl) (MMboe) NPV10
US$ million (7)
Kurdamir (3)
Tertiary Oligocene 1004 402 470 (8)
Tertiary Eocene 91 36 47 (8)
Cretaceous 108 43 69 (8)
Garmian (4)
Jeribe/Upper Dhiban
(below lowest known oil) 61 24 24 347
Jeribe/Upper Dhiban
(potential extension southwest flank) 87 35 35 (8)
Upper Fars 63 25 25 (8)
Mio-Oligocene 41 16 16 (8)
Eocene 33 13 13 (8)
Cretaceous 5 2 2 (8)
18 bbls
20 - 24% = 27 - 31%
90bbls
7bbls3 7bbls 4bbls
Royalty Oil 10% of total crude oil
Total Oil Produced
Net Available Oil
100bbls
10bbls
32bbls
WesternZagros (2)
40%
Talisman/Gazprom
Neft 40%
KRG
20%
Cost Recovery Oil up to 45% of net available oil
Total Profit Oil sharing based on R-Factor slide
range of 35%/65% 16%/84%
Contractor Group
40bbls1
50bbls 2
KRG** *
1. WesternZagros entitled to 60% on Kurdamir and 50% on Garmian based on funding required under both PSCs 2. R factor is the ratio of cumulative revenues over cumulative costs 3. KRG is entitled to a 3% capacity building bonus of WesternZagros profit oil for a net effective share of 38.8%.
See the October 2, 2014 Material Change Report for Garmian Block Gross and Working Interest 2P reserves. In addition, see the Company’s Annual Information Form dated March 13, 2014 (“AIF”) and its MD&A for its most recently completed fiscal quarter for a further description of these reserves, Contingent Resources and Prospective Resources. Additional information relating to
WesternZagros is also available on SEDAR at www.sedar.com, including the AIF and such MD&A.
5 / Corporate Fact Sheet
2 / Corporate Fact Sheet
Executive Management Team Simon Hatfield Chief Executive Officer Greg Stevenson Chief Financial Officer Mike Tinkler VP Exploration and Reservoir Development Lance Berg VP Engineering and Operations Tony Kraljic VP Business Development Bill Jack VP and General Manager Kurdistan Mary Benassi VP Human Resources Board of Directors David Boone Independent Businessman Fred Dyment Chairman, WesternZagros Resources Ltd. John Frangos Independent Businessman Simon Hatfield CEO, WesternZagros Resources Ltd. James Houck Independent Businessman John Howland Crest Investment Company Randall Oliphant Executive Chairman and Director, New Gold Inc. William Wallace Independent Businessman Analysts Contact FirstEnergy Gerry Donnelly 44 207 448 0251/214 / [email protected] GMP Ryan Savage 403 543 3584 / [email protected] HSBC Bank plc Peter Hitchens 44 207 991 6787 / [email protected] RBC Capital Markets Al Stanton 44 131 222 3638 / [email protected] Schachter Asset Management Josef Schachter 403 264 4413 / [email protected] Scotia Capital Gavin Wylie 403 213 7333 / [email protected] Standard Bank Group Lionel Therond 44 203 145 6645 / [email protected] TD Securities Shahin Amini 44 20 7 282 8217 / [email protected] Pickering Holt & Co. Shola Labinjo 44 203 008 6437 / [email protected] Wood & Company Yuriy Kukhtanych 420 222 096 452 / [email protected]
Head Office: 600, 440 – 2
nd Avenue SW
Calgary, Alberta T2P 5E9 T. +1 403 693 7001 F. +1 403 233 0174 Investor Inquiries: T. +1 403 693 7017 [email protected]
Sarqala-1 Development Plan Phase 1 facility upgrades increasing capacity up to 15,000 bbl/d by early 2015
6 / Corporate Fact Sheet
2 / Corporate Fact Sheet
